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Wall Street Is Largely Unfazed by Plunging Copper Prices

Mohit Oberoi, CFA - Author

Nov. 23 2018, Published 3:20 p.m. ET

Copper miners

The metals and mining space has seen a reversal of fortune this year. Metals prices plunged to multiyear lows in 2015 and 2016. However, China’s stimulus helped fuel a rally in commodity prices.

Supply curtailments announced by companies such as Freeport-McMoRan (FCX) and Glencore also helped copper markets.

President Donald Trump’s election as the US president fueled another buying spree in metals in 2016. President Trump’s supposedly business-friendly economic policies and infrastructure boost were expected to provide a leg up to the US economy (SPY). The looming supply deficit predicted by most market observers also supported copper prices.

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Copper prices

Copper rose to a four-year high earlier this year. However, trade war fears and concerns about the Chinese economy have taken a toll on metal prices, with copper being no exception. Copper miners, including Southern Copper (SCCO) and Antofagasta (ANTO), have followed copper down. However, diversified miners such as Vale (VALE) are trading with gains this year amid the strength in seaborne iron ore prices.

Series overview

The third-quarter earnings season is almost over, and most copper miners have released their third-quarter earnings and production results. In this series, we’ll see how analysts are rating copper miners amid lower copper prices. We’ll also look at leading copper miners’ third-quarter earnings and operational data.

Let’s begin by analyzing Freeport’s ratings and target prices.


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